THE ACIT 12(1), MUMBAI V. M/S. ELPHOINSTONE CRICKET CLUB, MUMBAI

ITA 4830/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1670 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 26-04-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 05-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRA BHAT JHA
• Keywords: Depreciation; Retrospective amendment; Reassessment proceedings
• Section: 54

Judgement Text

ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH, MUMBAI BEFORE SHRI N V VASUDEVAN AND SHRI PRAMOD KUMAR ITA NOS. 4830 AND 4831/MUM/07 ASSESSMENT YEARS 2002-03 AND 2003-04 ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 12 (1), MUMBAI .APPELLANT VS. ELPHINSTONE CRICKET CLUB ... RESPONDENT ELPHINSTONE HOUSE, 6 TH FLOOR 17, MARZBAN ROAD, OPP STERLING CINEMA MUMBAI 400 001 (PAN : AAAAE0010F) APPELLANT BY : SHRI PRABHAT JHA RESPONDENT BY : SHRI PORUS KAKA O R D E R PER PRAMOD KUMAR: 1. THE ISSUES INVOLVED IN THESE TWO APPEALS ARE INT ERCONNECTED, ARISING OUT OF THE SAME SET OF FACTS AND DECISION ON THESE ISSUES WILL ALSO BE INTERDEPENDENT. BOTH THE APPEALS PERTAIN TO THE SAM E ASSESSEE, AND WERE HEARD TOGETHER. THE ASSESSMENT YEARS INVOLVED ARE 2 002-03 AND 2003-04 AND THE IMPUGNED SEPARATE, BUT MATERIALLY IDENTICAL , ORDERS WERE PASSED BY THE CIT (A) ON THE SAME DAY I.E. 27 TH APRIL 2007. AS A MATTER OF CONVENIENCE, THEREFORE, BOTH OF THESE APPEALS ARE B EING DISPOSED BY WAY ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 2 OF 12 OF THIS CONSOLIDATED ORDER. 2. THE SHORT ISSUE THAT WE HAVE TO DECIDE IN THESE APPEALS IS WHETHER CAPITAL GAINS OF RS 5,37,84,514, ON SALE OF PROPER TY, IS TO BE TAXED IN THE HANDS OF THE ASSESSEE IN THE ASSESSMENT YEAR 2002-0 3 OR IN THE ASSESSMENT YEAR 2003-04. WHILE ASSESSEES CLAIM IS THAT THE TAXABLE CAPITAL GAIN ARISES IN THE ASSESSMENT YEAR 2003-04, THE CLA IM OF THE ASSESSING OFFICER IS THAT THE SAID CAPITAL GAIN SHOULD BE TAX ED IN THE ASSESSMENT YEAR 2002-03. THE ASSESSING OFFICER HAS ACCEPTED ASSESS EES OFFER OF TAXABILITY IN THE ASSESSMENT YEAR 2003-04 ON PROTECTIVE BASIS, AND BROUGHT IT TO TAX, ON SUBSTANTIVE BASIS, IN THE ASSESSMENT YEAR 2002-0 3. THE CIT(A), ON THE OTHER HAND, HAS HELD THAT THE CAPITAL GAIN IN QUEST ION IS TO BE TAXED ON SUBSTANTIVE BASIS IN THE ASSESSMENT YEAR 2003-04. I T IS CORRECTNESS OF THIS STAND OF THE CIT(A) WHICH HAS BEEN CHALLENGED IN TH ESE APPEALS BEFORE US. 3. TO ADJUDICATE ON THESE APPEALS, A FEW MATERIAL F ACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS A SPORTS CLUB AN D IT OWNS PREMISES IN A COOPERATIVE SOCIETY BY THE NAME OF ELPHINSTONE PRE MISES COOPERATIVE SOCIETY LIMITED. ON 1 ST JUNE 1984, THE ASSESSEE ENTERED INTO A LEAVE AND LICENCE AGREEMENT WITH TIRUVENGADAM & COMPANY ( T & CO, IN SHORT). UNDER THE SAID LEAVE AND LICENCE AGREEMENT, T & CO WAS GIVEN THE 4 TH FLOOR OF ELPINSTONE HOUSE, LOCATED IN THEELPHINSTONE PRE MISES COOPERATIVE SOCIETY LIMITED, ( PROPERTY, IN SHORT) FOR A MO NTHLY COMPENSATION OF RS ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 3 OF 12 25,000 IN ADDITION TO RS 1,750 AS HIRE CHARGES AND RS 750 AS SERVICE CHARGES. BY A SUPPLEMENTARY AGREEMENT DATED 7 TH JUNE 1984 WITH T & CO., THE ASSESSEE PERMITTED T & CO TO SUB LICENCE THE SA ID PREMISES TO M/S R K SWAMY/ BBDO ADVERTISING PVT LTD (RKS, IN SHORT). ON EXPIRY OF THE SAID AGREEMENT, AND VIDE FRESH AGREEMENT DATED 18 TH JANUARY 1996 WITH RETROSPECTIVE EFFECT FROM 1 ST JUNE 1994, THE LEASE AND LICENCE AGREEMENT WAS RENEWED ON A COMPENSATION OF RS 55,000 PER MONT H, IN ADDITION TO HIRING CHARGES OF RS 5,000 PM AND SERVICE CHARGES O F RS 2,500 PM. ON 18 TH JANUARY 1996, THE ASSESSEE ENTERED INTO AN AGREEME NT TO SELL THE REVERSIONARY RIGHTS IN THE SAID LICENCED PREMISES, ALONGWITH SHARES IN THE ELPHINSTONE PREMISES COOPERATIVE SOCIETY LIMITED AN D OTHER INCIDENTAL RIGHTS THEREIN, TO TIRUVENGADAM INVESTMENTS PVT LTD (TIPL, IN SHORT). THIS AGREEMENT TO SELL WAS SUBJECT TO THE LEAVE AND LICE NCE AGREEMENT WITH T & CO AND T & COS SUB LICENCING TO RKS. UNDER THE TER MS OF THE AGREEMENT TO SELL THIS PROPERTY FOR RS 5,37,50,000, THE ASSESSEE WAS TO GET THE SALE CONSIDERATION IN THE FOLLOWING MANNER: (A) RS 15,00,000 BEFORE EXECUTION OF THE AGREEM ENT (B) RS 1,50,00,000 WITHIN 30 DAYS FROM DATE OF CLEARANCE BY APPROPRIATE AUTHORITY UNDER CHAPTER XXC OF THE INCOME TAX ACT, 1961. (C) RS 3,37,50,000 IN EQUAL MONTHLY INSTALMENTS OVER A PERIOD OF FIVE YEARS (D) RS 35,00,000 WITHIN ONE MONTH FROM THE AF TER COMPLETION OF EXPIRY OF THE ABOVE MENTIONED FIVE YEAR PERIOD 4. IT WAS ALSO AGREED BY THE PARTIES THAT AS FAR AS THE ABOVE PAYMENTS ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 4 OF 12 ARE CONCERNED, TIME IS ESSENCE OF THE CONTRACT, A ND THAT IN THE EVENT OF ANY FAILURE TO COMPLY WITH THE PAYMENT SCHEDULE AND WITHOUT PREJUDICE TO ANY OTHER RIGHTS, THE ASSESSEE WILL BE ENTITLED TO INTEREST @ 18% P.A. ON DELAYS IN PAYMENTS. IT APPEARS THAT WHILE THE ASSE SSEE PAID THE AMOUNTS ENVISAGED IN (A), (B) AND (C) ABOVE, THERE WERE DEL AYS IN MAKING THE PAYMENTS AS PER SCHEDULE, AND THE ASSESSEE DEMANDED INTEREST ON SUCH DELAYS. TPIL DISPUTED THESE INTEREST DEMANDS. THERE WERE ALSO SOME DISPUTE REGARDING THE PAYMENT FOR CAR PARKING SPACE . THE ASSESSEE ALSO DEMANDED AN UNDERTAKING FROM THE TIPL TO THE EFFECT THAT SHOULD THE COLLECTOR OF BOMBAY REFUND THE AMOUNT OF RS 4,13,27 0, DEPOSITED BY THE ASSESSEE AS LAND REVENUE DEMAND UNDER PROTEST, THE TIPL WILL NOT HAVE ANY CLAIM IN THE SAME. THE NO OBJECTION CERTIFICATE FROM ELPHINSTONE PREMISES COOPERATIVE SOCIETY LIMITED, FOR ACCEPTING TIPL AS A MEMBER OF THE SOCIETY, COULD BE OBTAINED ONLY ON 23 RD SEPTEMBER 2002, WHEREAS THE LAST PAYMENT OF INSTALMENT WAS DUE ON 1 ST JUNE 2001 AND THE LEASE ARRANGEMENTS TO T & CO ALSO CAME TO AN END ON THAT DAY. THE LAST PAYMENT OF RS 35 LAKHS WAS MADE ON 23 RD OCTOBER 2002. IT WAS IN THIS BACKGROUND THAT THE EXECUTION OF SALE DEED AND, HANDING OVER O F POSSESSION FOR THAT PURPOSE, WAS DELAYED TILL 14 TH JANUARY 2003. ACCORDINGLY, THE ASSESSEE DISCLOSED THE CAPITAL GAIN ON SALE OF THE PROPERTY AS ITS INCOME FOR THE ASSESSMENT YEAR 2003-04. THE ASSESSEE ALSO MADE AN INVESTMENT OF RS 3,25,00,000 IN THE CAPITAL GAINS BOND SO AS TO AVAI L EXEMPTION UNDER SECTION 54 EC OF THE ACT. ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 5 OF 12 5. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSING OFFICER HELD THAT SINCE THE PROPERTY SOLD BY THE ASSESSEE WAS A DEPRECIATION ASSET, THE CAPITAL GAIN S ON SALE OF THE SAID PROPERTY COULD ONLY BE ASSESSED AS SHORT TERM CAPI TAL GAIN. IT WAS FURTHER HELD THAT, FOR THE REASON THAT THE CAPITAL GAIN WAS A SHORT TERM CAPITAL GAIN, THE ASSESSEE CANNOT AVAIL THE BENEFIT OF EXE MPTION UNDER SECTION 54 EC. THE ASSESSING OFFICER FURTHER HELD THAT, IN AN Y EVENT, THE INVESTMENT IN CAPITAL GAINS BOND WAS MADE AFTER THE EXPIRY OF SIX MONTHS FROM THE DATE OF TRANSFER, SINCE, ACCORDING TO HIM, THE ACTU AL DATE OF TRANSFER WAS 1 ST JUNE 2001 AND NOT 14 TH JANUARY 2002 AS CLAIMED BY THE ASSESSEE. THE REASONING OF THIS APPROACH WAS THAT WHEN LEASE AND LICENCE AGREEMENT EXPIRED ON 1 ST JUNE 2001, THE ASSESSEE CAME TO BE IN POSSESSION O F THE PROPERTY. IT WAS ALSO NOTED THAT THE ASSESSEE WAS N OT PAID ANY RENT FOR THE PERIOD AFTER THE DATE OF 1 ST JUNE 2001. THE ASSESSING OFFICER WAS, WITH HIS DETAILED ANALYSIS OF JUDICIAL PRECEDENTS, OF THE VI EW THAT THE SCOPE OF EXPRESSION TRANSFER IN THE INCOME TAX ACT, WAS WI DER IN ITS SCOPE AND OPERATE ON EFFECTIVE TRANSFER OF ENJOYMENT, OR PAR T PAYMENT, OR POSSESSION. ACCORDINGLY, WHILE THE ASSESSING OFFI CER TAXED THE CAPITAL GAINS ON PROTECTIVE BASIS FOR THE ASSESSMENT YEAR 2003-04, EVEN AS HE DENIED THE EXEMPTION UNDER SECTION 54EC, THE ASSESS ING OFFICER ALSO HELD THAT THIS CAPITAL GAIN IS ACTUALLY LIABLE TO BE TAX ED IN THE ASSESSMENT YEAR 2002-03. THE REASSESSMENT PROCEEDINGS FOR THE ASSES SMENT YEAR 2002-03 ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 6 OF 12 WERE ACCORDINGLY INITIATED AND THE SAID CAPITAL GAI N WAS BROUGHT TO TAX, ON SUBSTANTIVE BASIS, IN THE ASSESSMENT YEAR 2002-03. 6. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A). THE CIT(A) UPH ELD THE CONTENTION OF THE ASSESSEE THAT THE DATE OF TRANSFER OF PROPERTY IS TO BE TAKEN AS THE DATE ON WHICH SALE DEED IS ENTERED INTO AND ON WHICH POS SESSION IS HANDED OVER PURSUANT TO THE SAME. IT WAS ALSO HELD THAT, IN VIE W OF HONBLE BOMBAY HIGH COURTS JUDGMENT IN THE CASE OF CIT VS ACE BU ILDERS PVT LTD (281 ITR 210), THE EXEMPTION UNDER SECTION 54EC IS ALSO AVAI LABLE IN RESPECT OF SHORT TERM CAPITAL GAINS. THE CIT(A) ALSO HELD THAT THE DATE OF POSSESSION CANNOT BE TAKEN AS 1 ST JUNE 2001 AS THE BUYER OF THE PROPERTY WAS NOT IN A POSITION TO PERFORM HIS OBLIGATIONS UNDER THE AGREE MENT, AND, THEREFORE, PROVISIONS OF SECTION 53 A OF THE TRANSFER OF PROPE RTY ACT WERE NOT ATTRACTED. IT WAS ACCORDINGLY CONCLUDED THAT THE C ORRECT YEAR OF TAXABILITY OF CAPITAL GAIN IS 2003-04, THAT EXEMPTION UNDER SE CTION 54EC WAS TO BE GRANTED TO THE ASSESSEE IN RESPECT OF SPECIFIED INV ESTMENTS, AND THAT TAXABILITY OF THE SAID CAPITAL GAIN DID NOT ARISE I N THE ASSESSMENT YEAR 2002-03. THE ASSESSING OFFICER IS AGGRIEVED OF THE STAND SO TAKEN BY THE LEARNED COMMISSIONER (APPEALS), AND IS IN APPEAL BE FORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AT LENGTH, P ERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 7 OF 12 8. WE FIND THAT THE ONLY REASON OF ASSESSING OFFICE RS BRINGING THE CAPITAL GAIN, ON SALE OF PROPERTY, TO TAX IN THE AS SESSMENT YEAR 2002-03 IS THAT, ACCORDING TO THE ASSESSING OFFICER, THE BUYER WAS HANDED OVER THE POSSESSION ON 1 ST JUNE 2001. THE ONLY THING WHICH HAPPENED ON THAT DATE WAS THAT THE LEAVE AND LICENCE AGREEMENT DATED 18.1 .1996 WITH T & CO, AN ASSOCIATED CONCERN OF THE BUYER, CAME TO AN END, BU T THEN, IN A SUBSEQUENT SETTLEMENT, THE ASSESSEE WAS PAID RS 2,50,000 TOWAR DS FULL AND FINAL SETTLEMENT FOR LICENCE FEES FOR OCCUPYING THE SAID PROPERTY BEYOND THE PERIOD MENTIONED IN THE LICENCE AGREEMENT DATED 18. 1.1996 WITH TIRUVENGADAM & CO. THIS AMOUNT WAS PAID VIDE CHEQU E NO. 362337 DATED 22.7.2002 AND THE RELATED CORRESPONDENCE HAS BEEN P LACED BEFORE US, INCLUDING AT PAGES 65-66 OF THE PAPERBOOK. THE REVE NUE AUTHORITIES OR EVEN THE LEARNED DEPARTMENTAL REPRESENTATIVE HAVE N OT DISPUTED BONAFIDES OR AUTHENTICITY OF THIS SETTLEMENT. IN T HE LIGHT OF THIS FACTUAL POSITION, IT COULD NOT REALLY BE SAID THAT THAT THE LICENCE ARRANGEMENT FOR OCCUPATION BY T & CO DID NOT REALLY EXIST AND THE BUYER HAD OCCUPIED THE PREMISES IN PART PERFORMANCE OF THE CONTRACT. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT T & CO IS NOT THE BUYER EVE N THOUGH IT IS AN ASSOCIATED CONCERN, AND THEREFORE THE MERE FACT TH AT T & CO IS IN POSSESSION OF THE PROPERTY, IT CANNOT BE SAID THAT THE BUYER WAS IN POSSESSION OF PROPERTY. WE HAVE ALSO NOTED THAT THE RE WERE CERTAIN DISPUTES BETWEEN THE BUYER AND SELLER AT THE MATERI AL POINT OF TIME AND ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 8 OF 12 THE CORRESPONDENCE PLACED BEFORE US IN THE PAPERBOO K, WHICH INCLUDES COPIES OF LETTERS WRITTEN BY THE BUYER, THE ASSESSE E AND ALSO LEGAL ADVISORS I.E. MULLA & MULLA & CRAIGIE BLUNT & CAROE, ESTABL ISHES THE EXISTENCE OF THESE DISPUTES. WE HAVE ALSO NOTED THAT, AS PER CH ART FILED AT PAGES 54 AND 55 OF THE PAPERBOOK, THERE HAVE BEEN ALLEGED DELAYS IN MAKING PAYMENTS OF INSTALMENTS, WHICH RANGED FROM 25 DAYS TO 318 DA YS, AND THAT THE ASSESSEE HAD DEMANDED INTEREST OF RS 20,08,436 IN R ESPECT OF THESE DELAYS IN PAYMENTS. THIS CLAIM WAS FINALLY SETTLED ON 23 RD JULY 2002, AND, ACCORDINGLY, THE ASSESSEE WAS PAID RS 4,14,750 VIDE CHEQUE NO. 362335. IT IS THUS CLEAR THAT THERE WERE DISPUTES BETWEEN T HE PARTIES AND PENDING THE RESOLUTION OF THESE DISPUTES, THE BUYER WAS NOT PERFORMING HIS OBLIGATIONS IN THE AGREEMENT. IT WAS ONLY ON 25 TH OCTOBER 2002, AND AFTER RESOLUTION OF THESE DISPUTES, THAT TIPL PAID RS 35, 00,000 TO THE ASSESSEE VIDE CHEQUE NO. 362353 DRAWN ON UCO BANK. 9. IN TERMS OF THE PROVISIONS OF SECTION 2(47)(V) T RANSFER DOES INCLUDE ANY TRANSACTION INVOLVING THE ALLOWING OF POSSESSI ON OF ANY IMMOVEABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANC E OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53 A OF THE TRANSFER OF PROPERTY ACT. SECTION 53 A OF THE TRANSFER OF PROPERTY ACT REFERS TO A SI TUATION WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 9 OF 12 POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE BEING ALREADY IN POSSESSION, CONTINUES THE POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND DONE SOME ACT IN FURTHERANCE OF TH E CONTRACTS AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM H IS PART OF THE CONTRACT. ELABORATING UPON THE SCOPE OF EXPRESSION HAS PERFO RMED OR IS WILLING TO PERFORM, THE OFT QUOTED COMMENTARY MULLA THE TR ANSFER OF PROPERTY ACT ( 9 TH EDITION PUBLISHED BY BUTTERWORTH INDIA, AT PAGE 44 8, OBSERVES THAT WILLINGNESS TO PERFORM THE ROLES ASCRIBED TO A PART Y IN A CONTRACT IS PRIMARILY A MENTAL DISPOSITION. HOWEVER , SUCH WILLINGNESS IN THE CONTEXT OF SECTION 53A OF THE ACT HAS TO BE ABSOLUTE AND UNCONDITIONAL. IF WILLINGNESS IS STUDDED WITH A CON DITION, IT IS IN FACT NO MORE THAN AN OFFER AND CANNOT BE TERMED AS WILLI NGNESS. WHEN VENDEE COMPANY EXPRESSES ITS WILLINGNESS TO PAY THE AMOUNT, PROVIDED THE VENDOR CLEARS HIS INCOME TAX ARREARS, THERE IS NO COMPLETE WILLINGNESS BUT A CONDITIONAL WILLINGNESS OR PARTIAL WILLINGNESS WHICH IS NOT SUFFICIENT . THESE OBSERVATIONS HAVE BEEN QUOTED, WITH APPROVAL, BY A COORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF GENERAL GLASS CO. LTD VS DCIT (14 SOT 32). LET US APPLY THIS TEST TO THE SITUATION BEFORE US. THE PROPERTY IS IN POSSESSION OF A SISTER CONCERN OF THE BUYER WHICH IS NOT THE SAME THING AS IN THE POS SESSION OF THE BUYER. IN ANY EVENT, THE SISTER CONCERN HAS COMPENSATED THE S ELLER FOR HAVING OCCUPIED THE PROPERTY, UNDER LICENCE, BEYOND THE TI ME PERMISSIBLE UNDER THE LEASE AND LICENCE AGREEMENT. THE BUYER IS NOT P ERFORMING HIS PART OF ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 10 OF 12 THE CONTRACT INASMUCH AS THERE HAVE BEEN DELAYS IN PAYMENTS ON INSTALMENTS AND THERE ARE DISPUTES ON INTEREST CHAR GES IN RESPECT OF THE DELAY. THE LAST PAYMENT OF RS 35 LAKHS WHICH SHOULD HAVE BEEN MADE ON 30 TH JUNE 2001 WAS NOT MADE TILL 25 TH OCTOBER 2002. ON THESE FACTS, IN OUR HUMBLE UNDERSTANDING, THE TRANSFEREE CANNOT BE EVEN SAID TO BE, IN JUNE 2001, WILLING TO PERFORM HIS PART OF THE CONTR ACT. OF COURSE, THE TRANSFEREE WAS NOT EVEN IN POSSESSION OF THE PROPER TY EITHER, BUT EVEN IF WE LEAVE THAT ASIDE FOR A MINUTE, THE REMAINING CON DITIONS OF SECTION 53 A ARE NOT SATISFIED EITHER. IN OUR CONSIDERED VIEW, THEREFORE, TRANSFER CANNOT BE SAID TO HAVE TAKEN PLACE IN JUNE 2001. THERE IS NO RATIONAL AND LEGAL BASIS FOR ASSESSING OFFICERS STAND THAT THE TRANSF ER TOOK PLACE IN JUNE 2001 I.E. IN THE PREVIOUS YEAR RELEVANT TO THE ASSE SSMENT YEAR 2002-03. THE CIT(A) WAS, THEREFORE, JUSTIFIED IN UPHOLDING T HE CLAIM OF THE ASSESSEE THAT THE CAPITAL GAINS ON SALE OF PROPERTY IS TAXAB LE IN THE ASSESSMENT YEAR 2003-04. AS REGARDS THE ADMISSIBILITY OF EXEMPTION UNDER SECTION 54 EC, WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVO UR OF THE ASSESSEE BY HONBLE BOMBAY HIGH COURTS JUDGMENT IN THE CASE OF ACE BUILDERS (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CON CLUSIONS ARRIVED AT BY THE CIT (A) ON THIS ASPECT OF THE MATTER AS WELL. 10. IN VIEW OF THE ABOVE DISCUSSIONS, AND FOR THE R EASONS SET OUT ABOVE, WE UPHOLD THE CONCLUSIONS ARRIVED AT BY THE CIT(A) FOR BOTH THE YEARS IN APPEAL BEFORE US, AND DECLINE TO INTERFERE IN THE M ATTER. GRIEVANCES OF THE ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 11 OF 12 ASSESSING OFFICER ARE, ACCORDINGLY, REJECTED. 11. IN THE RESULT, THE APPEALS ARE DISMISSED. PRONO UNCED IN THE OPEN COURT TODAY ON 31 ST DAY OF MAY, 2010. SD/XX SD/XX ( N V VASUDEVAN) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 31 ST DAY OF MAY, 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT , MUMBAI 4. THE COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE - J BENCH, MUMBAI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI ITA NO. 4830 - 1 /MUM/07 ASSESSMENT YEAR 2002-03 AND 03-04 PAGE 12 OF 12 DATE INITIAL 1. DRAFT DICTATED ON 28.5.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28.5.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 28.5.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 28.5.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.5.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 31.5.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 31.5.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER